Investing in real estate is not for the faint of heart. Investing of any sort of best taken up by individuals who are able to hold a long-term view of their finances and plan ahead for their futures. Real estate investing is no different. There is definitely something to be said for taking one’s time and learning the process of real estate investing bit by bit rather than jumping in head first. That being said, some people do learn best by being “thrown to the sharks” as they say. Whichever personality you fit, rest assured that real estate investing is something you definitely can take up.
Who Can Do it?
Investing in real estate is just another means of making one’s money work harder. Like investing in the stock market or in a product that needs crowdfunding, there is a certain amount of risk in real estate investing. This means that people need to really think about what they can afford to lose when beginning an investing journey. That being said, some people much prefer investing in a physical item that they can see.
For these individuals investing in stocks may not be as enjoyable as investing in a physical thing, such as a crowd-funding product or property. If you think that investing in a tangible item that can be seen and walked through, real estate may be for you!
What is Real Estate Investing?
Put simply, real estate investing is using property to act as an investment. Property increases in value almost always. This makes a piece of property a safe place to park cash as long as you as the investor are content having that money remain inaccessible for a period of time.
Once purchased, the property is increasing in value slowly but surely throughout the months and years you own it. That means that when you go to sell the property you have purchased, you will sell the property for more money than you purchased it for. Therefore, you have earned money on that investment!
How Do I Make Money In Real Estate?
To make money in real estate you can either rent out a property you have purchased, flip and sell that property quickly so you pay fewer taxes on it, or you can simply let the property sit and wait for the value to increase enough that you can sell it, and gain both your cost to purchase and a profit.
For the most part, however, renting out an investment property is the best way to start out in the real estate investing game. That way you are earning an income to put towards your mortgage, and while you and your renter are paying down your mortgage, the value of the property itself is still slowly but surely increasing over time.
Where Do I Begin Investing in Real Estate?
Whether you want to jump in head first or enter the real estate investing water step by step, the best first step you can do is start thinking about what kind of risk you are willing to take with your money. Is real estate investing something you are willing to take on? If you decide that you are ready and willing to tie up your savings in property, then you need to think about whether you are a handyman or a passive investor.
What Type of Investor Am I?
Active Real Estate Investor
If you have woodworking skills or electrical skills, or if you know people who are qualified plumbers or window repairers and the like, then you could definitely be a real estate flipper-investor. These investors purchase run-down properties for lower prices than surrounding houses, and they update their purchases to make the properties desired. These flipped houses can then be put on the market for more than they were originally purchased for, which means that you will make a profit and have a strong return on your investment.
Passive Real Estate Investor
However, if you are not a particularly good woodworker, or if you don’t know the first thing about plumbing, then you might do better as a passive investor. In this case, you would do well to get a renter into your property and use that as a more long-term investment strategy. By slowly getting rent, you can be paying down your house. While you may not be able to update a dilapidated home, and you may have to pay more up front, you will be able to still see your property as an investment.
Just Start The Process
Whatever type of investor you are, rest assured that real estate investing is not a scary prospect once you get started on it. On the face of it, real estate investing is simply purchasing property and using that property as your nest egg. Of course, property must be sold in order for you to regain the liquid cash that you have invested, but in the vast majority of cases, property is able to be sold quickly.
After all, there are far fewer people who are willing to invest in real estate than there are people who need a place to live. That means there are always going to be people looking to rent properties, and there are always going to be people looking to purchase properties. If you have cash savings that you are not sure what to do with, just look into real estate. You might be pleasantly surprised by what you find is up for sale.
Build the Life You Want Through Real Estate!
By being the individual who is able to provide that property, or fix up that run-down house into something a family would love to buy, you will come out several steps ahead of all those other human beings. And that is what sets real estate investors apart from the average joe. Real estate investors are willing to take risks to make their own dreams and aspirations reality. So what do you say, feel ready to tip at least a toe into the waters of real estate investing? Feel ambitious enough that you can jump head-first into that fixer-upper on the corner of your street? Wherever you are at this point in your real estate investing research, start your journey to a new life today!